After examining the briefs and the record, we have concluded�

that oral argument is unnecessary. The appeal is therefore

submitted on the briefs and the record. FED. R. APP. P.

34(a)(2)(C).

In the

United States Court of AppealsFor the Seventh Circuit

No. 10-1122

GLORIA E. SWANSON,

Plaintiff-Appellant,

v.

CITIBANK, N.A., et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 09 C 2344—James B. Zagel, Judge.

SUBMITTED MAY 26, 2010 —DECIDED JULY 30, 2010�

Before EASTERBROOK, Chief Judge, and POSNER and

WOOD, Circuit Judges.

WOOD, Circuit Judge. Gloria Swanson sued Citibank,

Andre Lanier, and Lanier’s employer, PCI Appraisal

2 No. 10-1122

Services, because she believed that all three had discrimi-

nated against her on the basis of her race (African-Ameri-

can) when Citibank turned down her application for a

home-equity loan. Swanson also named her husband,

Charles Routen, as a co-plaintiff and a co-appellant,

but since Swanson is proceeding pro se, she may not

represent her husband. See FED. R. CIV. P. 11(a); Malone

v. Nielson, 474 F.3d 934, 937 (7th Cir. 2007). We have there-

fore dismissed Routen as a party on appeal; we proceed

solely with respect to Swanson’s part of the case. She

was unsuccessful in the district court, which dismissed

in response to the defendants’ motion under FED. R.

CIV. P. 12(b)(6).

Swanson based her complaint on the following set of

events, which we accept as true for purposes of this

appeal. Hemi Group, LLC v. City of New York, N.Y., 130 S.

Ct. 983, 986-87 (2010). In February 2009 Citibank an-

nounced a plan to make loans using funds that it had

received from the federal government’s Troubled Assets

Relief Program. Encouraged by this prospect, Swanson

went to a Citibank branch to apply for a home-equity

loan. A representative named Skertich told Swanson that

she could not apply alone, because she owned her home

jointly with her husband; he had to be present as well.

Swanson was skeptical, suspecting that Skertich’s demand

was a ploy to discourage loan applications from African-

Americans. She therefore asked to speak to a manager.

When the manager joined the group, Swanson disclosed

to both Skertich and the manager that Washington

Mutual Bank previously had denied her a home-equity

loan. The manager warned Swanson that, although she

No. 10-1122 3

did not want to discourage Swanson from applying for

the loan, Citibank’s loan criteria were more stringent

than those of other banks.

Still interested, Swanson took a loan application home

and returned the next day with the necessary informa-

tion. She was again assisted by Skertich, who entered the

information that Swanson had furnished into the com-

puter. When he reached a question regarding race,

Skertich told Swanson that she was not required to re-

spond. At some point during this exchange, Skertich

pointed to a photograph on his desk and commented

that his wife and son were part African-American.

A few days later Citibank conditionally approved

Swanson for a home-equity loan of $50,000. It hired

Andre Lanier, who worked for PCI Appraisal Services, to

visit Swanson’s home for an onsite appraisal. Although

Swanson had estimated in her loan application that her

house was worth $270,000, Lanier appraised it at only

$170,000. The difference was critical: Citibank turned

down the loan and explained that its conditional

approval had been based on the higher valuation. Two

months later Swanson paid for and obtained an ap-

praisal from Midwest Valuations, which thought her

home was worth $240,000.

Swanson saw coordinated action in this chain of events,

and so she filed a complaint (later amended) charging

that Citibank, Lanier, and PCI disfavor providing home-

equity loans to African-Americans, and so they delib-

erately lowered the appraised value of her home far

below its actual market value, so that they would have

4 No. 10-1122

an excuse to deny her the loan. She charges that in so

doing, they violated the Fair Housing Act, 42 U.S.C.

§ 3605, and the Equal Credit Opportunity Act, 15

U.S.C. § 1691(a)(1). The district court granted the defen-

dants’ motions to dismiss both theories. It relied heavily on

Latimore v. Citibank Fed. Savings Bank, 151 F.3d 712 (7th

Cir. 1998), a case in which this court described the

evidence required to defeat a defense motion for sum-

mary judgment on a credit discrimination claim. Initially,

the court liberally construed Swanson’s complaint to

include a common-law fraud claim and declined to

dismiss that aspect of the case. Later, however, the defen-

dants moved to dismiss the fraud claim as well, and the

district court granted the motion on the grounds that

the statements on which Swanson relied were too indefi-

nite and her reliance was unreasonable. This appeal

followed.

Before turning to the particulars of Swanson’s case, a

brief review of the standards that apply to dismissals

for failure to state a claim is in order. It is by now well

established that a plaintiff must do better than putting

a few words on paper that, in the hands of an imagina-

tive reader, might suggest that something has happened

to her that might be redressed by the law. Cf. Conley v.

Gibson, 355 U.S. 41, 45-46 (1957), disapproved by Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 563 (2007) (“after

puzzling the profession for 50 years, this famous observa-

tion [the ‘no set of facts’ language] has earned its retire-

ment”). The question with which courts are still strug-

gling is how much higher the Supreme Court meant to

set the bar, when it decided not only Twombly, but also

No. 10-1122 5

Erickson v. Pardus, 551 U.S. 89 (2007), and Ashcroft v. Iqbal,

129 S. Ct. 1937 (2009). This is not an easy question to

answer, as the thoughtful dissent from this opinion

demonstrates. On the one hand, the Supreme Court

has adopted a “plausibility” standard, but on the other

hand, it has insisted that it is not requiring fact

pleading, nor is it adopting a single pleading standard

to replace Rule 8, Rule 9, and specialized regimes like

the one in the Private Securities Litigation Reform Act

(“PSLRA”), 15 U.S.C. § 78u-4(b)(2).

Critically, in none of the three recent decisions—

Twombly, Erickson, or Iqbal—did the Court cast any

doubt on the validity of Rule 8 of the Federal Rules of

Civil Procedure. To the contrary: at all times it has said

that it is interpreting Rule 8, not tossing it out the win-

dow. It is therefore useful to begin with a look at the

language of the rule:

(a) Claim for Relief. A pleading that states a claim

for relief must contain:

* * *

(2) a short and plain statement of the claim show-

ing that the pleader is entitled to relief . . . .

FED. R. CIV. P. 8(a)(2). As one respected treatise put it

in 2004,

all that is necessary is that the claim for relief be stated

with brevity, conciseness, and clarity . . . . [T]his

portion of Rule 8 indicates that a basic objective

of the rules is to avoid civil cases turning on tech-

6 No. 10-1122

nicalities and to require that the pleading discharge

the function of giving the opposing party fair notice of

the nature and basis or grounds of the pleader’s

claim and a general indication of the type of litiga-

tion that is involved. . . .

5 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL

PRACTICE AND PROCEDURE § 1215 at 165-173 (3d ed. 2004).

Nothing in the recent trio of cases has undermined

these broad principles. As Erickson underscored, “[s]pecific

facts are not necessary.” 551 U.S. at 93. The Court was not

engaged in a sub rosa campaign to reinstate the old fact-

pleading system called for by the Field Code or even

more modern codes. We know that because it said so in

Erickson: “the statement need only give the defendant

fair notice of what the . . . claim is and the grounds upon

which it rests.” Id. Instead, the Court has called for more

careful attention to be given to several key questions:

what, exactly, does it take to give the opposing party “fair

notice”; how much detail realistically can be given, and

should be given, about the nature and basis or grounds

of the claim; and in what way is the pleader expected to

signal the type of litigation that is being put before the

court?

This is the light in which the Court’s references in

Twombly, repeated in Iqbal, to the pleader’s responsibility

to “state a claim to relief that is plausible on its face” must

be understood. See Twombly, 550 U.S. at 570; Iqbal, 129

S. Ct. at 1949. “Plausibility” in this context does not imply

that the district court should decide whose version to

No. 10-1122 7

believe, or which version is more likely than not. Indeed,

the Court expressly distanced itself from the latter ap-

proach in Iqbal, “the plausibility standard is not akin to

a probability requirement.” 129 S. Ct. at 1949 (quotation

marks omitted). As we understand it, the Court is

saying instead that the plaintiff must give enough

details about the subject-matter of the case to present a

story that holds together. In other words, the court will

ask itself could these things have happened, not did they

happen. For cases governed only by Rule 8, it is not

necessary to stack up inferences side by side and allow

the case to go forward only if the plaintiff’s inferences

seem more compelling than the opposing inferences.

Compare Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d

702, 705 (7th Cir. 2008) (applying PSLRA standards).

The Supreme Court’s explicit decision to reaffirm the

validity of Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002),

which was cited with approval in Twombly, 550 U.S. at 556,

indicates that in many straightforward cases, it will not

be any more difficult today for a plaintiff to meet that

burden than it was before the Court’s recent decisions. A

plaintiff who believes that she has been passed over for

a promotion because of her sex will be able to plead that

she was employed by Company X, that a promotion

was offered, that she applied and was qualified for it,

and that the job went to someone else. That is an entirely

plausible scenario, whether or not it describes what

“really” went on in this plaintiff’s case. A more complex

case involving financial derivatives, or tax fraud that

the parties tried hard to conceal, or antitrust violations,

8 No. 10-1122

will require more detail, both to give the opposing

party notice of what the case is all about and to show

how, in the plaintiff’s mind at least, the dots should be

connected. Finally, as the Supreme Court warned in

Iqbal and as we acknowledged later in Brooks v. Ross, 578

F.3d 574 (7th Cir. 2009), “abstract recitations of the ele-

ments of a cause of action or conclusory legal state-

ments,” 578 F.3d at 581, do nothing to distinguish the

particular case that is before the court from every other

hypothetically possible case in that field of law. Such

statements therefore do not add to the notice that Rule 8

demands.

We realize that one powerful reason that lies behind

the Supreme Court’s concern about pleading standards

is the cost of the discovery that will follow in any case

that survives a motion to dismiss on the pleadings.

The costs of discovery are often asymmetric, as the

dissent points out, and one way to rein them in would

be to make it more difficult to earn the right to engage

in discovery. That is just what the Court did, by interring

the rule that a complaint could go forward if any set

of facts at all could be imagined, consistent with the

statements in the complaint, that would permit the

pleader to obtain relief. Too much chaff was moving

ahead with the wheat. But, in other contexts, the

Supreme Court has drawn a careful line between those

things that can be accomplished by judicial interpreta-

tion and those that should be handled through the proce-

dures set up in the Rules Enabling Act, 28 U.S.C. §§ 2071

et seq. See Mohawk Indus., Inc. v. Carpenter, 130 S. Ct.

No. 10-1122 9

599, 609 (2009). In fact, the Judicial Conference’s

Advisory Committee on Civil Rules is engaged in an

intensive study of pleading rules, discovery practice, and

the costs of litigation, as its recent 2010 Civil Litigation

Conference, held at Duke Law School May 10-11, 2010,

demonstrates. See Summary of 2010 Conference on Civil

Litigation at Duke Law School, University of Denver

Institute for the Advancement of the American

Legal System, at http://www.du.edu/legalinstitute/pdf/

DukeConference.pdf (last visited July 28, 2010).

Returning to Swanson’s case, we must analyze her

allegations defendant-by-defendant. We begin with

Citibank. On appeal, Swanson challenges only the dis-

missal of her Fair Housing Act and fraud claims.

The Fair Housing Act prohibits businesses engaged in

residential real estate transactions, including “[t]he

making . . . of loans or providing other financial assist-

ance . . . secured by residential real estate,” from discrim-

inating against any person on account of race. 42 U.S.C.

§ 3605(a), (b)(1)(B). Swanson’s complaint identifies the

type of discrimination that she thinks occurs (racial), by

whom (Citibank, through Skertich, the manager, and the

outside appraisers it used), and when (in connection

with her effort in early 2009 to obtain a home-equity

loan). This is all that she needed to put in the complaint.

See Swierkiewicz, 534 U.S. at 511-12 (employment discrimi-

nation); see also Fritz v. Charter Twp. of Comstock, 592

F.3d 718, 723-24 (6th Cir. 2010); Comm. Concerning Cmty.

Improvement v. City of Modesto, 583 F.3d 690, 715 (9th Cir.

2009).

10 No. 10-1122

The fact that Swanson included other, largely extraneous

facts in her complaint does not undermine the sound-

ness of her pleading. She points to Citibank’s announced

plan to use federal money to make more loans, its refusal

to follow through in her case, and Skertich’s comment

that he has a mixed-race family. She has not pleaded

herself out of court by mentioning these facts; whether

they are particularly helpful for proving her case or not

is another matter that can safely be put off for another

day. It was therefore error for the district court to

dismiss Swanson’s Fair Housing Act claim against

Citibank.

Her fraud claim against Citibank stands on a different

footing. Rule 9(b) of the Federal Rules of Civil Proce-

dure provides that “[i]n alleging fraud or mistake, a

party must state with particularity the circumstances con-

stituting fraud or mistake. Malice, intent, knowledge,

and other conditions of a person’s mind may be alleged

generally.” Of special relevance here, a plaintiff must

plead actual damages arising from her reliance on a

fraudulent statement. Tricontinental Indus., Ltd. v.

PricewaterhouseCoopers, LLP, 475 F.3d 824, 841 (7th Cir.

2007). Without a contract, only out-of-pocket losses alleg-

edly arising from the fraud are recoverable. Roboserve,

Inc. v. Kato Kagaku Co., Ltd., 78 F.3d 266, 274 (7th Cir.

1996) (applying Illinois law). Swanson asserts that

Citibank falsely announced plans to make federal funds

available in the form of loans to all customers, when it

actually intended to exclude African-American customers

from those who would be eligible for the loans. Swanson

No. 10-1122 11

relied, she says, on that false information when she

applied for her home-equity loan. But she never alleged

that she lost anything from the process of applying for

the loan. We do not know, for example, whether there

was a loan application fee, or if Citibank or she covered

the cost of the appraisal. This is the kind of particular

information that Rule 9 requires, and its absence means

that the district court was entitled to dismiss the claim.

We now turn to Swanson’s claims against Lanier and

PCI. Here again, she pursues only her Fair Housing Act

and fraud claims. (The appraisal defendants point out

that they do not extend credit, and thus their actions

are not covered in any event by the Equal Credit Oppor-

tunity Act, 15 U.S.C. § 1691a(e).) The Fair Housing Act

makes it “unlawful for any person or other entity whose

business includes engaging in residential real estate-

related transactions to discriminate against any person in

making available such a transaction, or in the terms or

conditions of such a transaction, because of race . . . .” 42

U.S.C. § 3605(a). The statute goes on to define the term

“residential real estate-related transaction” to include “the

selling, brokering, or appraising of residential real prop-

erty.” 42 U.S.C. § 3605(b)(2). There is an appraisal exemp-

tion also, found in § 4605(c), but it provides only that

nothing in the statute prohibits appraisers from taking

into consideration factors other than race or the other

protected characteristics.

Swanson accuses the appraisal defendants of skewing

their assessment of her home because of her race. It is

unclear whether she believes that they did so as part of

12 No. 10-1122

a conspiracy with Citibank, or if she thinks that they

deliberately undervalued her property on their own

initiative. Once again, we find that she has pleaded

enough to survive a motion under Rule 12(b)(6). The

appraisal defendants knew her race, and she accuses them

of discriminating against her in the specific business

transaction that they had with her. When it comes to

proving her case, she will need to come up with more

evidence than the mere fact that PCI (through Lanier)

placed a far lower value on her house than Midwest

Valuations did. See Latimore, 151 F.3d at 715 (need more

at the summary judgment stage than evidence of a dis-

crepancy between appraisals). All we hold now is that

she is entitled to take the next step in this litigation.

This does not, however, save her common-law fraud

claim against Lanier and PCI. She has not adequately

alleged that she relied on their appraisal, nor has she

pointed to any out-of-pocket losses that she suffered

because of it.

We therefore REVERSE the judgment of the district court

insofar as it dismissed Swanson’s Fair Housing Act

claims against all three defendants, and we AFFIRM

insofar as it dismissed the common-law fraud claims

against all three. Each side will bear its own costs on

appeal.

No. 10-1122 13

POSNER, Circuit Judge, dissenting in part. I join the

majority opinion except with respect to reversing the

dismissal of the plaintiff’s claim of housing discrimina-

tion. I have difficulty squaring that reversal with

Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), unless Iqbal is

limited to cases in which there is a defense of official

immunity—especially if as in that case it is asserted by

very high-ranking officials (the Attorney General of the

United States and the Director of the FBI)—because the

defense is compromised if the defendants have to

respond to discovery demands in a case unlikely to have

merit. Smith v. Duffey, 576 F.3d 336, 340 (7th Cir. 2009);

Robert G. Bone, “Plausibility Pleading Revisited and

Revised: A Comment on Ashcroft v. Iqbal,” 85 Notre Dame L.

Rev. 849, 882 (2010); Howard M. Wasserman, “Iqbal,

Procedural Mismatches, and Civil Rights Litigation,” 14

Lewis & Clark L. Rev. 157, 172-73 (2010).

The majority opinion does not suggest that the

Supreme Court would limit Iqbal to immunity cases. The

Court said that “our decision in Twombly [Bell Atlantic

Corp. v. Twombly, 550 U.S. 544 (2007), the forerunner of

Iqbal] expounded the pleading standard for ‘all civil

actions.’ ” 129 S. Ct. at 1953. It did add that a district

judge’s promise of minimally intrusive discovery “pro-

vides especially cold comfort in this pleading context,

where we are impelled to give real content to the

concept of qualified immunity for high-level officials

who must be neither deterred nor detracted from the

vigorous performance of their duties.” Id. at 1954. But this

seems just to mean that the Court thought Iqbal a strong

case for application of the Twombly standard, rather

14 No. 10-1122

than thinking it the only type of discrimination case

to which the standard applies.

There is language in my colleagues’ opinion to suggest

that discrimination cases are outside the scope of Iqbal,

itself a discrimination case. The opinion says that “a

plaintiff who believes that she has been passed over for

a promotion because of her sex will be able to plead that

she was employed by Company X, that a promotion

was offered, that she applied and was qualified for it,

and that the job went to someone else.” Though this

is not a promotion case, the opinion goes on to say that

“Swanson’s complaint identifies the type of discrim-

ination that she thinks occurs (racial), by whom (Citibank,

through Skertich, the manager, and the outside ap-

praisers it used), and when (in connection with her

effort in early 2009 to obtain a home equity loan). This is

all that she needed to put in the complaint.” In contrast,

“a more complex case involving financial derivatives, or

tax fraud that the parties tried hard to conceal, or antitrust

violations, will require more detail, both to give the

opposing party notice of what the case is all about and

to show how, in the plaintiff’s mind at least, the dots

should be connected.” The “more complex” case to which

this passage is referring is Twombly, an antitrust case. But

Iqbal, which charged the defendants with having sub-

jected Pakistani Muslims to harsh conditions of confine-

ment because of their religion and national origin, was

a discrimination case, as is the present case, and was not

especially complex.

Suppose this were a promotion case, and several people

were vying for a promotion, all were qualified, several

No. 10-1122 15

were men and one was a woman, and one of the men

received the promotion. No complexity; yet the district

court would “draw on its judicial experience and common

sense,” Ashcroft v. Iqbal, supra, 129 S. Ct. at 1950, to con-

clude that discrimination would not be a plausible ex-

planation of the hiring decision, without additional

allegations.

This case is even stronger for dismissal because it lacks

the competitive situation—man and woman, or white

and black, vying for the same job and the man, or the

white, getting it. We had emphasized this distinction, long

before Twombly and Iqbal, in Latimore v. Citibank Federal

Savings Bank, 151 F.3d 712 (7th Cir. 1998), like this a case

of credit discrimination rather than promotion.

“Latimore was not competing with a white person for a

$51,000 loan. A bank does not announce, ‘We are

making a $51,000 real estate loan today; please submit

your applications, and we’ll choose the application that

we like best and give that applicant the loan.’ ” Id. at

714. We held that there was no basis for an inference of

discrimination. Noland v. Commerce Mortgage Corp., 122

F.3d 551, 553 (8th Cir. 1997), and Simms v. First Gibraltar

Bank, 83 F.3d 1546, 1558 (5th Cir. 1996), rejected credit-

discrimination claims because there was no evidence

that similar applicants were treated better, and Boykin v.

Bank of America Corp., 162 Fed. App’x 837, 840 (11th Cir.

2005) (per curiam), rejected such a claim because “absent

direct evidence of discrimination, there is no basis for

a trier of fact to assume that a decision to deny a loan

was motivated by discriminatory animus unless the

16 No. 10-1122

plaintiff makes a showing that a pattern of lending sug-

gests the existence of discrimination.”

There is no allegation that the plaintiff in this case

was competing with a white person for a loan. It was

the low appraisal of her home that killed her chances

for the $50,000 loan that she was seeking. The appraiser

thought her home worth only $170,000, and she already

owed $146,000 on it (a first mortgage of $121,000 and a

home-equity loan of $25,000). A further loan of $50,000

would thus have been undersecured. We must assume

that the appraisal was a mistake, and the house worth

considerably more, as she alleges. But errors in ap-

praising a house are common because “real estate

appraisal is not an exact science,” Latimore v. Citibank

Federal Savings Bank, supra, 151 F.3d at 715—common

enough to have created a market for “Real Estate Ap-

praisers Errors & Omissions” insurance policies. See,

e.g., OREP (Organization of Real Estate Professionals),

“E&O Insurance,” www.orep.org/appraisers-e&o.htm (vis-

ited July 11, 2010). The Supreme Court would consider

error the plausible inference in this case, rather than

discrimination, for it said in Iqbal that “as between that

‘obvious alternative explanation’ for the [injury of which

the plaintiff is complaining] and the purposeful, invidious

discrimination [the plaintiff] asks us to infer, discrimina-

tion is not a plausible conclusion.” Ashcroft v. Iqbal, supra,

129 S. Ct. at 1951-52, quoting Twombly, 550 U.S. at 567.

Even before Twombly and Iqbal, complaints were dis-

missed when they alleged facts that refuted the plain-

tiffs’ claims. See, e.g., Tierney v. Vahle, 304 F.3d 734, 740

No. 10-1122 17

(7th Cir. 2002); Thomas v. Farley, 31 F.3d 557 (7th Cir.

1994); Lightner v. City of Wilmington, 545 F.3d 260, 262 (4th

Cir. 2008). Under the new regime, it should be enough

that the allegations render a claim implausible. The

complaint alleges that Citibank was the second bank to

turn down the plaintiff’s application for a home-equity

loan. This reinforces the inference that she was not quali-

fied. We further learn that, subject to the appraisal,

which had not yet been conducted, Citibank had

approved the $50,000 home-equity loan that the plaintiff

was seeking on the basis of her representation that her

house was worth $270,000. But she didn’t think it was

worth that much when she applied for the loan. The

house had been appraised at $260,000 in 2004, and the

complaint alleges that home values had fallen by “only”

16 to 20 percent since. This implies that when she

applied for the home-equity loan her house was worth

between $208,000 and $218,400—much less than what

she told Citibank it was worth.

If the house was worth $208,000, she would have owed

a total of $196,000 had she gotten the loan, or just a shade

under the market value of the house. If the bank had

insisted that she have a 20 percent equity in the house,

which would be $41,600, it would have lent her only

$20,400 ($166,400—80 percent of $208,000—minus the

$146,000 that she already owed on the house). The loan

figure rises to $28,720 if the house was worth $218,400

rather than $208,000. In either case a $50,000 loan would

have been out of the question, especially in the wake of the

financial crash of September 2008, when credit, including

home-equity credit, became extremely tight. E.g., Bob

18 No. 10-1122

Tedeschi, “Opening the Tap on Home Equity,” N.Y.

Times, Nov. 7, 2008, p. RE9, www.nytimes.com/2008/11/02/

realestate/02mort.html. For it was a home-equity loan

that the plaintiff was seeking in early February of 2009, at

the nadir of the economic collapse—and seeking it from

troubled Citibank, one of the banks that required a federal

bailout in the wake of the crash. Financial reports in the

weeks surrounding the plaintiff’s application make clear

the difficulty of obtaining credit from Citibank during that

period. See Binyamin Appelbaum, “Despite Federal Aid,

Many Banks Fail to Revive Lending,” Wash. Post, Feb. 3,

2009, www.washingtonpost.com/wp-dyn/content/article/

2009/02/02/AR2009020203338_pf.html (“some of the first

banks to get funding, such as Citigroup and J.P. Morgan

Chase, have reported the sharpest drops in lending”); Liz

Moyer, “Banks Promise Loans but Hoard Cash,”

Forbes.com, Feb. 3, 2009, www.forbes.com/2009/02/03/

banking-federal-reserve-business-wall-street-0203_

loans.html (“ ‘banks and other lenders have tightened

access to credit and are conserving capital in order to

absorb the losses that occur when borrowers default,’ the

company [Citibank] said: ‘Citi will not and cannot take ex-

cessive risk with the capital the American public and

other investors have entrusted to the company’ ”); Mara

Der Hovanesian & David Henry, “Citi: The Losses

Keep Coming,” Bloomberg BusinessWeek, Jan. 12, 2009,

www.businessweek.com/bwdaily/dnflash/content /

jan2009/db20090112_136301.htm?campaign_id=rss_daily

(“banks are not lending. They are using every opportunity

to pull loans and force liquidations”). (All web sites were

visited on July 11, 2010.)

No. 10-1122 19

In Erickson v. Pardus, 551 U.S. 89 (2007) (per curiam),

decided two weeks after Twombly, the Supreme Court,

without citing Twombly, reinstated a prisoner’s civil rights

suit that had been dismissed on the ground that the

allegations of the complaint were “conclusory.” The suit

had charged deliberate indifference to the plaintiff’s need

for medical treatment. In the key passage in the Court’s

opinion, we learn that “the complaint stated that

Dr. Bloor’s decision to remove the petitioner [that is, the

plaintiff] from his prescribed hepatitis C medication was

‘endangering [his] life.’ It alleged this medication was

withheld ‘shortly after’ petitioner had commenced a

treatment program that would take one year, that he was

‘still in need of treatment for this disease,’ and that the

prison officials were in the meantime refusing to provide

treatment. This alone was enough to satisfy Rule 8(a)(2).

Petitioner, in addition, bolstered his claim by making

more specific allegations in documents attached to the

complaint and in later filings” (emphasis added, record

citations omitted). It was reasonable to infer from these

allegations, assuming their truth, that the defendants

(who included Dr. Bloor, a prison doctor) had acted with

deliberate indifference to the petitioner’s serious medical

need by refusing to provide him with any medical treat-

ment after taking away his medication. Indeed it’s

difficult (again assuming the truth of the allegations) to

imagine an alternative interpretation. Hepatitis C is a

serious disease and the prisoner had been put in a treat-

ment program expected to last a year. To refuse him

any treatment whatsoever seemed (as the other allega-

tions to which the Court referred confirmed) to be puni-

20 No. 10-1122

tive. I think Erickson is good law even after Iqbal, but I also

think it’s miles away from a case in which all that’s

alleged (besides pure speculation about the defendants’

motive) is that someone was denied a loan because her

house is mistakenly appraised for less than its market

value.

The majority opinion relies heavily on Swierkiewicz v.

Sorema N.A., 534 U.S. 506 (2002), cited with approval in

Twombly, see 550 U.S. at 556 (though not cited in Iqbal) and

not overruled. Although it is regarded in some quarters

as dead after Iqbal, e.g., Fowler v. UPMC Shadyside, 578

F.3d 203, 211 (3d Cir. 2009); Suja A. Thomas, “The

New Summary Judgment Motion: The Motion to

Dismiss Under Iqbal and Twombly,” 14 Lewis & Clark L.

Rev. 15, 35 (2010), lower-court judges are not to deem a

Supreme Court decision overruled even if it is plainly

inconsistent with a subsequent decision. State Oil Co. v.

Khan, 522 U.S. 320 (1997); Agostini v. Felton, 521 U.S. 203,

237 (1997); Rodriguez de Quijas v. Shearson/American

Express, Inc., 490 U.S. 477, 484 (1989); National Rifle Ass’n

v. City of Chicago, 567 F.3d 856, 857-58 (7th Cir. 2009),

reversed under the name McDonald v. City of Chicago,

2010 WL 2555188 (U.S. June 28, 2010). But that principle

is not applicable here; Swierkiewicz is distinguishable.

The Court rejected a rule that the Second Circuit had

created which required “heightened pleading” in Title VII

cases. The basic requirement for a complaint (“a short

and plain statement of the claim showing that the pleader

is entitled to relief”) is set forth in Rule 8(a)(2) of the

Federal Rules of Civil Procedure. Rule 9 requires height-

No. 10-1122 21

ened pleading (that is, a specific allegation) of certain

elements in particular cases, such as fraud and special

damages. There is no reference to heightened pleading of

discrimination claims, however, and Swierkiewicz holds

that the judiciary is not authorized to amend Rule 9

without complying with the procedures in the Rules

Enabling Act. 534 U.S. at 513-15; Leatherman v. Tarrant

County Narcotics Intelligence & Coordination Unit, 507 U.S.

163, 168-69 (1993); Saritha Komatireddy Tice, Note, “A

‘Plausible’ Explanation of Pleading Standards: Bell

Atlantic Corp. v. Twombly,” 31 Harv. J.L. & Pub. Pol’y 827,

832 n. 49 (2008). As the Court explained in Twombly,

“Swierkiewicz did not change the law of pleading, but

simply re-emphasized . . . that the Second Circuit’s use of

a heightened pleading standard for Title VII cases was

contrary to the Federal Rules.” 550 U.S. at 570. But Title VII

cases are not exempted by Swierkiewicz from the doctrine

of the Iqbal case. Iqbal establishes a general requirement of

“plausibility” applicable to all civil cases in federal courts.

It does so, however, in opaque language: “The plausi-

bility standard is not akin to a ‘probability requirement,’

but it asks for more than a sheer possibility that a defen-

dant has acted unlawfully.” 129 S. Ct. at 1949. In

statistics the range of probabilities is from 0 to 1, and

therefore encompasses “sheer possibility” along with

“plausibility.” It seems (no stronger word is possible) that

what the Court was driving at was that even if the

district judge doesn’t think a plaintiff’s case is more

likely than not to be a winner (that is, doesn’t think p > .5),

as long as it is substantially justified that’s enough

to avert dismissal. Cf. Equal Access to Justice Act, 28

22 No. 10-1122

U.S.C. § 2412(d)(1)(A). But when a bank turns down a

loan applicant because the appraisal of the security for

the loan indicates that the loan would not be adequately

secured, the alternative hypothesis of racial discrimina-

tion does not have substantial merit; it is implausible.

Behind both Twombly and Iqbal lurks a concern with

asymmetric discovery burdens and the potential for

extortionate litigation (similar to that created by class

actions, to which Rule 23(f) of the civil rules was a re-

sponse, Isaacs v. Sprint Corp., 261 F.3d 679, 681 (7th Cir.

2001); Blair v. Equifax Check Services, Inc., 181 F.3d 832, 834-

35 (7th Cir. 1999); Newton v. Merrill Lynch, Pierce, Fenner &

Smith, Inc., 259 F.3d 154, 162-65 (3d Cir. 2001); Vallario v.

Vandehey, 554 F.3d 1259, 1263 (10th Cir. 2009); Fed. R. Civ.

P. 23(f) Committee Note) that such an asymmetry creates.

Ashcroft v. Iqbal, supra, 129 S. Ct. at 1953; Bell Atlantic Corp.

v. Twombly, supra, 550 U.S. at 557-59; Cooney v. Rossiter, 583

F.3d 967, 971 (7th Cir. 2009); Beck v. Dobrowski, 559 F.3d

680, 682 (7th Cir. 2009); Kendall v. Visa U.S.A., Inc., 518

F.3d 1042, 1046-47 (9th Cir. 2008). In most suits against

corporations or other institutions, and in both Twombly

and Iqbal—but also in the present case—the plaintiff

wants or needs more discovery of the defendant than

the defendant wants or needs of the plaintiff, because

the plaintiff has to search the defendant’s records (and,

through depositions, the minds of the defendant’s em-

ployees) to obtain evidence of wrongdoing. With the

electronic archives of large corporations or other large

organizations holding millions of emails and other elec-

tronic communications, the cost of discovery to a defen-

dant has become in many cases astronomical. And the cost

No. 10-1122 23

is not only monetary; it can include, as well, the disruption

of the defendant’s operations. If no similar costs are

borne by the plaintiff in complying with the defendant’s

discovery demands, the costs to the defendant may

induce it to agree early in the litigation to a settlement

favorable to the plaintiff.

It is true, as critics of Twombly and Iqbal point out, that

district courts have authority to limit discovery. E.g.,

Griffin v. Foley, 542 F.3d 209, 223 (7th Cir. 2008); Searls v.

Glasser, 64 F.3d 1061, 1068 (7th Cir. 1995); Deitchman v. E.R.

Squibb & Sons, Inc., 740 F.2d 556, 563 (7th Cir. 1984); Mwani

v. Bin Laden, 417 F.3d 1, 17 (D.C. Cir. 2005). But especially

in busy districts, which is where complex litigation is

concentrated, the judges tend to delegate that authority

to magistrate judges. And because the magistrate judge

to whom a case is delegated for discovery only is not

responsible for the trial or the decision and can have

only an imperfect sense of how widely the district judge

would want the factual inquiry in the case to roam

to enable him to decide it, the magistrate judge is likely

to err on the permissive side. “One common form of

unnecessary discovery (and therefore a ready source

of threatened discovery) is delving into ten issues when

one will be dispositive. A magistrate lacks the authority

to carve off the nine unnecessary issues; for all the magis-

trate knows, the judge may want evidence on any one of

them. So the magistrate stands back and lets the parties

have at it. Pursuit of factual and legal issues that will not

matter to the outcome of the case is a source of enormous

unnecessary costs, yet it is one hard to conquer in a

system of notice pleading and even harder to limit when

24 No. 10-1122

an officer lacking the power to decide the case supervises

discovery.” Frank H. Easterbrook, “Discovery as Abuse,”

69 B.U. L. Rev. 635, 639 (1989); see also Milton Pollack,

“Discovery—Its Abuse and Correction,” 80 F.R.D. 219, 223

(1979); Virginia E. Hench, “Mandatory Disclosure and

Equal Access to Justice: The 1993 Federal Discovery Rules

Amendments and the Just, Speedy and Inexpensive

Determination of Every Action,” 67 Temple L. Rev. 179, 232

(1994).

This structural flaw helps to explain and justify the

Supreme Court’s new approach. It requires the plaintiff

to conduct a more extensive precomplaint investigation

than used to be required and so creates greater

symmetry between the plaintiff’s and the defendant’s

litigation costs, and by doing so reduces the scope for

extortionate discovery. If the plaintiff shows that he

can’t conduct an even minimally adequate investigation

without limited discovery, the judge presumably can

allow that discovery, meanwhile deferring ruling on the

defendant’s motion to dismiss. Miller v. Gammie, 335 F.3d

889, 899 (9th Cir. 2003) (en banc); Coss v. Playtex Products,

LLC, No. 08 C 50222, 2009 WL 1455358 (N.D. Ill. May 21,

2009); Edward A. Hartnett, “Taming Twombly, Even After

Iqbal,” 158 U. Pa. L. Rev. 473, 507-14 (2010); Suzette M.

Malveaux, “Front Loading and Heavy Lifting: How Pre-

Dismissal Discovery Can Address the Detrimental Effect

of Iqbal on Civil Rights Cases,” 14 Lewis & Clark L. Rev. 65

(2010). No one has suggested such a resolution for

this case.

The plaintiff has an implausible case of discrimination,

but she will now be permitted to serve discovery de-

No. 10-1122 25

mands that will compel elaborate document review by

Citibank and require its executives to sit for many hours

of depositions. (Not that the plaintiff is capable of con-

ducting such proceedings as a pro se, but on remand

she may—indeed she would be well advised to—ask the

judge to help her find a lawyer.) The threat of such an

imposition will induce Citibank to consider settlement

even if the suit has no merit at all. That is the pattern

that the Supreme Court’s recent decisions are aimed

at disrupting.

We should affirm the dismissal of the suit in its entirety.

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